Several things weigh into our decision to take on an additional shortline brand of equipment:
- We don’t like to hop in and out of business with several different brands, so it’s not something we take lightly. Brand recognition and longevity are very important to us as well as how well the products will fit in our particular market.
- Parts availability and warranty policies are very important to us.
- Available terms and discount structure are also important pieces of the puzzle.
- Lastly, we like to get references from existing dealers that are handling the products already. Typically, that is where we get the best and most frank advice about how the company is to do business with.
As a rule of thumb, we don’t add a shortline without doing our due diligence and if everything doesn’t come together well, we are typically slow to pull the trigger.
— Robert Dinsmore,
Ceresville New Holland,
What we try to look for before we partner with a shortline company are some of the following:
- Is the shortline company able to support what they are selling or manufacturing with warranty, parts and technical support after the sale? If they can’t support what they sell, the dealers have to stand behind the product if they don’t.
- Do they have a website? And if so, do they have a list of their dealers on their website?
- Are they selling direct to the end user?
- What is an acceptable margin for the products we are stocking/selling?
- Who are the other dealers they are selling to and are they in our AOR?
- What are their stocking requirements for wholegoods and parts?
- What is their warranty policy?
- How much do they pay for warranty repairs?
- Are they willing to pay for travel time and mileage?
- When does the warranty start — at the time of sale to the dealer or to the end user? This is a problem when stocking/renting shortline equipment.
- How do we look up their parts? Online?
- What is the margin percentage on parts? Does the shortline company have it listed online?
- Is there a stock order discount?
- What is their surplus return policy for parts and what percent?
- Do they have product liability insurance?
- How do they measure market share? What is required by the dealer?
And lastly we’ll review their dealer contract very closely!
— Gregg Erb,
Erb Equipment Co.,
Our top 5 considerations are:
- Quality of product (we don’t want to sell junk that breaks down frequently).
- Availability of product and its respective parts
- Response time when ordering product and its parts and receiving it for customers
- Pricing vs. its best competitors
- The minimum stocking requirements to be a dealer for that product/part”
— Myra Wright Powell,
Wright Brother Sales,
Here is some of what we take into account when looking at a new shortline:
- Does it fill a hole we currently have with our current equipment lineup?
- Is there a large enough demand for that product from our customers?
- Will it help our customers’ operations be more productive and efficient?
- Does it fit into our overall goals?
- How is the aftermarket support of that line (parts availability, training and product reliability)?
- How does it price and perform against other similar equipment in the market?
- Can we properly provide support to our customers for this line without it affecting our other services?”
— David Blake,
East Allen Ag & Turf,
The true need to add another shortline is: "How many could we expect to sell annually?"
Other important factors include:
- The reputation of the shortline and the quality of their products
- Exclusive saleable features that existing lines don’t offer
- Speedy availability of replacement parts
- Warranty policy
- Area of sales coverage responsibility, i.e., how close is the next dealer handling this line?
- Profit potential for the line in original sale and in parts and service.
— Stu Klinne,
Columbia Tractor Inc.,
My biggest concerns when looking at adding a shortline are the following:
- Will the line complement the equipment we are already selling?
- Is there a need in my trade area for this product or line?
- Where is the closest dealer that is selling this line?
- Are the margins large enough and the demand great enough for me to make enough money to invest my time and money in this product?
- What is the view of the company in the industry?
- Does this company build a quality product and provide good support and parts to support their product?
— Sam O’Toole,
New Frontier Ag,
The most important consideration for us is parts availability. Parts, parts, parts. Everything breaks. Nothing is forever. Can we get replacement parts and how fast can we get them into the customers’ hands?
The second most important consideration is how fast can the supplier get new product to us? Believe it or not, there are manufacturers that sell equipment with no plans in place for follow up sales, i.e., parts. That is not how we roll. We want all the business, the customer, the customer’s neighbor and their neighbors.
— Rob McFarlen,
Red Bluff, Calif.
There are several things that I look for in a new line.
- Who is selling it to us?
- Will they be there if we need help?
- Loyalty of the wholesaler — will he sell it to my neighbor as well?
- What is the quality level?
- Who in our organization will work with selling and service?
- What else might do the same job?
- The competition, what is it, where is it and price
— Art White,
White’s Farm Supply Inc.,
Before adding a shortline, I would look at the following:
- The financial soundness of the company and the support they can offer
- Their ability to offer product liability insurance
- The quality of the product and their manufacturing ability to build long term
- Our need to offer that product
- What other dealers or distributors sell or handle the product or their plans for sales
- Their warranty policy and parts support
— Curt Hanson,
- Who are the dealers in my trade area (to avoid a race to the bottom on margins)?
- Where is company inventory located and where is it manufactured?
- Where are parts distributed from, and is freight prepaid?
- What is the no interest period?
- What is floorplan program?
- How often will we see a representative?
- Is the product training available and who pays for it?
- Warranty and timely follow up on problems are also important
— Bevan Jones,
Chilliwack, British Columbia
- Do my customers need it; does it solve a problem for them?
- Is the company reputable, do they have a history?
- Is the product priced fairly?
- Do I get an exclusive area large enough to create a decent volume of sales and create a parts business?
— Ken Lebsack,
Magic Valley Equipment Co. Inc.,
We are constantly trying to reduce the number of vendors we have to deal with and that usually means shortliners. When we do look at a shortline company, they have to be able to provide an array of equipment that we could use.
We are not looking to have every brand available. We want a good product with a good reputation for support after the sale and a competitive price — not the cheapest.
— Dwayne Williams,
Today, I look at management … how long has someone in charge been with the company.
It seems like every time you develop a working relationship with a manager or CEO, it all changes when they move on. This can completely ruin a good thing.
— Paul Bergeron,
Pauls Farm Service,
Here are my thoughts:
- Quality (of the product and the vendor)
- Reputation in the industry of the vendor
- Exclusive territory? We don’t like competing with other dealers carrying the same product
- Priced so we can compete
- Their requirements of us: We don’t like vendors who push inventory on us — we like to be left to manage our own inventory needs
- Ease of doing business — do they have good parts and service support, ordering process, etc., and are they good people to work with?
- Warranty reimbursement
- Parts availability
— Rob Rosztoczy,
- What kind of support do they offer the dealer?
- Stocking requirements (both wholegoods and parts)
- Do they offer a floorplan and what is their cash discount?
- What are their terms?
- Who are their dealers that are already established in a 100-mile radius?
- What kind of reputation do they have in the market?
— Rene Auer,
Maxville Farm Machinery Ltd.,
First of all it needs to be good quality.
Other factors include:
- Competitively priced
- Good product support
- Availability of inventory
- Ordering program to increase discounts and minimize freight expense
— Mike Converse,
Garton Tractor Inc.,
- What are the wholesale and retail terms?
- How much product do we have to stock?
- What will they offer in sales and service support?
- What’s the quality of the product?
- How close or far away are their other dealerships?
— Phil Doty,
We try to determine the possible size of the market for the particular product, what our competitors offer and what type of a trade territory the supplier is able to provide. Multiple store ownership groups have made territories difficult, but you need to know who the players are and where they are located.
Then we try to find a supplier or rep who has more than one product that we can market, so the time and resources invested in servicing another vendor are justified.
Our next preference would be someone who has a very progressive online presence where we can get current product info, pricing info, service info and possibly warranty entry. The supplier’s physical location can also be a factor when considering freight costs.
— Boyd Mitchell,
Mitchell Equipment Inc.,
These are some of the things we consider:
- What the are the potential sales?
- What the cost for training will be for staff and techs?
- What the cost for parts stock will be?
- What is the cost of special tools?
- Will it affect cash flow?
- Do they have floorplan for trades?
- How many dealers are currently in the state or province and what is the plan for future dealers?
- Where is the company located and how quickly are parts available?
- What is the area of responsibility?
- Will it affect any part of our company negatively or positively?
- Will it have any effect on our mainline sales?
- Do our sales people want it?
- Is it a good fit for our company?
- Is it worth it at the end of the day?
— Bernie Chabot,
When adding shortlines to your current product offering lots of things come into play when choosing the right one. I am just going to list the criteria that I have used when deciding on a new product. These will be in no particular order of importance.
- Why do I need this product in my lineup?
- Who else is selling this same product and how close are they to my AOR?
- Do I have any current customers using this product or is it a relatively new technology and product?
- What are the dealer floorplan terms?
- What is the warranty policy and how much do they pay on warranty claims?
- By adding this line, will it increase my bottom line and in how many years?
- What is the stocking levels required by this manufacturer and will I have to purchase any new fixtures or add personnel?
- Is my current fleet of vehicles able to handle delivery and service of this product?
- Will this bring a different kind of customer traffic to my store to see the other products we offer?
- What kinds of promotional programs will I have to employ and who pays for that in co-op funds or dealer advertising budget money?
— Walter Green,
Deer Country Equipment LLC,
Product reputation in the field and customer demand over an extended period.
After that, great parts support.
After that, willingness to pay warranty at a fair rate.
Then probably as important as any is a great in-house or road sales support person.
— Don Van Houweling,
Van Wall Equipment,
My take on that is it has to be something you think will sell for years to come.
I have seen so many of the local dealers that will sell something for a short time and then just dump it. I hate to leave a customer hanging.
I think some people forget we are in a service business. We usually go against the grain. If we take a product on, we try to offer parts and service for that product — and for years to come.
As long as we have customers with that product, we try to offer support.
Several lines have all but vanished. One example is United Farm Tools. We still have several of their no-till drills in use in our area. We still have parts. Some we have outsourced and had built. But you need to look long and hard before you sign on the dotted line. There are several companies out there that have courted us, and I’m glad I just said no.
— Jeff Suchomski,
Suchomski Equipment Inc.,
If we consider taking on a shortline for additional revenue, then I would first research and discuss with other dealers who carry the same line several questions. I would ask them the following questions:
- Is the company reliable?
- Is the product reliable?
- How is the parts supply?
- How is technical support?
- How is warranty handled?
- How difficult are repairs on the unit?
- Are we going to send sales and techs for training on selling and repairs?
- How quick could we get parts from factory?
All these, and a lot more would come into play if we would take on a new shortline.
— Jayme Finafrock,
Smiths Implements Inc.,
- Will this create a conflict with our major supplier?
- How many wholegood units should we realistically plan on selling per year (at least 4 or 5)?
- Will we have adequate sales territory to avoid major in-line price competition?
- Product quality and reputation (brand recognition)
- Parts and service potential from the beginning
- Warranty reimbursement policy.
— Howard Wickham,
Fort Morgan, Colo.
I first want to evaluate the quality of the product, because I don’t have time to sell products that will create more problems because of poor quality.
I want to know about the manufacturer — who owns it, how long have they been in business. What kind of reputation do they have in the way they treat dealers and stand behind the equipment?
- Do they have a good distribution network for the equipment and parts?
- Do they have service people to help us with the product when we need them?
- Is the manufacturer financially sound?
- Do they have a floorplan or is the dealer expected to pay in 30 days?
- How much territory are they going to give a dealer? Or are they going to give the product to any and all dealers?
— Philip H. Brooks,
Brooks Sales Inc.,
- We would not consider adding a shortline if it competes with John Deere
- We only contemplate products that can be sold in volume
- It must be a line that fills a void, i.e., orchard sprayers and flail mowers such as manufactured by Rears Mfg. out of Eugene, Ore.
— Henry S. Miller,
Valley Truck and Tractor Co.,
Yuba City, Calif.
Originally published in 2013